Macro stress test assess the resilience of financial institutions to adverse macroeconomic shocks
Stress test results conducted by the RBI reaffirmed the resilience of banks and non-banking financial companies (NBFCs) to withstand losses under adverse scenarios and to maintain capital ratios well above the regulatory minimum at the aggregate level.Macro stress test assess the resilience of financial institutions to adverse macroeconomic shocks. The aggregate CRAR (capital to risk-weighted assets ratio) of 46 major SCBs (scheduled commercial banks) may decline from 17.5 per cent in March 2026 to 15.6 per cent by March 2028 under the baseline scenario, the Financial Stability Report said. It may fall to 13.3 per cent and 13.0 per cent under adverse scenarios 1 and 2, respectively.The tests attempt to project capital ratios of banks under a baseline and two adverse macro scenarios over a two-year horizon. While the baseline scenario has been derived from the latest forecasted paths of the macroeconomic variables, the two adverse scenarios are hypothetically stringent stress scenarios.The RBI assessed that at the bank level, no bank would breach the minimum CRAR requirement of 9 per cent under the baseline scenario, while one and two banks may fall below the requirement under adverse scenarios 1 and 2, respectively.The aggregate GNPA (gross non-performing asset ratio) ratio of 46 banks may edge up from 1.8 per cent in March 2026 to 1.9 per cent by March 2028 under the baseline scenario. It may rise to 3.8 per cent and 4.1 per cent under adverse scenarios 1 and 2, respectively.The RBI said under the baseline scenario, the system level GNPA ratio of the sample of 174 NBFCs, may rise from 2.4 per cent in March 2026 to 2.8 per cent in March 2027. Consequently, their aggregate CRAR may dip from 22.3 per cent to 20.8 per cent during the same period. Under the baseline scenario, seven NBFCs may breach the minimum regulatory capital requirement of 15 per cent.Under the medium and severe stress scenarios, income loss and additional provision requirements may further reduce the aggregate CRAR by additional 60 basis points (bps) and 80 bps, respectively, and 15 NBFCs may not be able to meet the regulatory minimum CRAR.Published on June 30, 2026
